French media reaction to Dexia crisis

By: Madison Marriage | 05 Oct 2011

The future of troubled Franco-Belgian bank Dexia is producing mixed reactions in the French press, from fears about the financial implications of saving the bank to France’s economic relationship with its Belgian neighbour.

It says the €6bn bailout given to the bank by the French and Belgian governments in 2008 was “a total waste” of money which was simply “swallowed up” by Dexia.

Le Monde’s disapproval of the French and Belgian governments’ reaction to the crisis is also clear: “Governments and central banks are once again tending to [Dexia’s] needs, stumbling towards an organized bankrupty while employees, local authorities and small shareholders are plunged into uncertainty.”

In reference to Dexia’s announcement in August 2011 that it had returned to profitability in the third quarter and passed its stress tests in July, Le Monde accuses the bank of “amazing blindness and a worrying denial of reality.”

Le Figaro

Le Figaro underlines French fears about the impact of extending further aid to Dexia on French public finances and more importantly, its AAA credit rating. “Should we save the troubled banks?” a sub-headline questions.

According to the paper, French socialist politician Laurent Fabius is fearful French debt levels could worsen if help is given to the Franco-Belgian bank. Meanwhile it reports the Governor of the Banque de France, Christian Noyer, and finance minister, Francois Baroin, have reiterated that France’s AAA rating is not under threat.

Le Figaro also details the “bad bank” proposal which would involve isolating €125bn of the bank’s toxic assets in a separate structure enabling the bank to sell off its healthier parts.

The newspaper highlights comments made by the Belgian prime minister, Yves Leterme, in reference to a potential nationalization of the bank. While admitting this is a possibility, Leterme also said such an event would have limited repercussions on Belgian public debt.

Agefi

French newswire Agefi has concentrated on the impact a potential restructuring of Dexia might have on loans to France’s local authorities.

“A quick solution must be found for the financing of local authorities,” one of Agefi’s headlines declares. It says that at the end of 2010, Dexia’s portfolio of loans to French local authorities totalled €81bn representing 15% of their financing needs.

According to the newspaper, Belgian politicians and press are concerned about bailing out the Franco-Belgian bank when the current crisis, apparently triggered by handing out toxic loans to local authorities, originated in France.

It says the Green party in Belgium, Groen, has been asking its government and bank administrators to “preserve Belgian interests in the face of French greed”.

Meanwhile the newspaper reports that the Belgian public has not forgotten the sale of its “precious” banking group Fortis to BNP Paribas in 2008, or the sale of Belgium-based energy company Electrabel to GDF Suez in 2007.

Belgian paper L’Echo confirms this sentiment of not repeating the errors of the past. It underlines the reaction of investor services company Deminor to the Dexia crisis, urging those handling its restructuring process “to avoid repeating the mistakes made with Fortis”.